When Are Monetary and Fiscal Policies Most Effective

question 1

Multiple Choice

When are monetary and fiscal policies most effective?

• A) Both are more effective when they address inflation than unemployment.
• B) Both are more effective when they address unemployment than inflation.
• C) Fiscal is more effective in a liquidity trap, and monetary is more effective otherwise.
• D) Monetary is more effective in a liquidity trap, and fiscal is more effective otherwise.

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Definitions:

Hydrolysis

A chemical reaction that involves the breaking of a bond in a molecule using water.

Single DNA Strands

Individual strands of deoxyribonucleic acid that carry genetic information, not paired as in the double helix structure.

Double Helix

The structure of DNA, consisting of two strands that wind around each other like a twisted ladder.

Hydrogen Bonds

Weak bonds between partially positive hydrogen atoms and partially negative atoms (often oxygen or nitrogen) in nearby molecules.